Correlation Between Applied Materials, and Mangels Industrial

Can any of the company-specific risk be diversified away by investing in both Applied Materials, and Mangels Industrial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Applied Materials, and Mangels Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Applied Materials, and Mangels Industrial SA, you can compare the effects of market volatilities on Applied Materials, and Mangels Industrial and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Applied Materials, with a short position of Mangels Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials, and Mangels Industrial.

Diversification Opportunities for Applied Materials, and Mangels Industrial

0.31

Correlation Coefficient

Applied Materials,  Mangels Industrial

Weak diversification

The 3 months correlation between Applied and Mangels is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials, and Mangels Industrial SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mangels Industrial and Applied Materials, is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Applied Materials, are associated (or correlated) with Mangels Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mangels Industrial has no effect on the direction of Applied Materials, i.e., Applied Materials, and Mangels Industrial go up and down completely randomly.

Pair Corralation between Applied Materials, and Mangels Industrial

Assuming the 90 days trading horizon Applied Materials, is expected to generate 0.75 times more return on investment than Mangels Industrial. However, Applied Materials, is 1.33 times less risky than Mangels Industrial. It trades about 0.07 of its potential returns per unit of risk. Mangels Industrial SA is currently generating about -0.02 per unit of risk. If you would invest  5,926  in Applied Materials, on October 23, 2024 and sell it today you would earn a total of  6,441  from holding Applied Materials, or generate 108.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.79%
Values	Daily Returns

Applied Materials,  vs.  Mangels Industrial SA

Applied Materials,

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Materials, are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Applied Materials, sustained solid returns over the last few months and may actually be approaching a breakup point.

Mangels Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mangels Industrial SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Preferred Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Applied Materials, and Mangels Industrial

The main advantage of trading using opposite Applied Materials, and Mangels Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials, position performs unexpectedly, Mangels Industrial can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Mangels Industrial will offset losses from the drop in Mangels Industrial's long position.

The idea behind Applied Materials, and Mangels Industrial SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Volatility Analysis module to get historical volatility and risk analysis based on latest market data.